The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 275 tonnes day on day to 16,154 tonnes on July 10, leading to a week-on-week decrease of 1,851 tonnes or 10.28%, and a decrease of 14,647 tonnes or 47.55% month on month.
SHFE copper price rose to about Yuan 67,800/tonne today, while premiums of refined copper in East China fell by Yuan 95/tonne.
The US NFP (non-farm payroll) unexpectedly fell to 209,000 in June, lower than the expected 225,000 and 306,000. In addition, which data was also revised down from 294,000 and 339,000 in April and May to 217,000 and 306,000, respectively. NFP, which was far lower than expected, led to a plunge in the US Dollar Index and a temporary rebound in the price of non-ferrous metals.
However, the US labor market remains hot, with the unemployment rate falling to 3.6% as expected, and overall wages still slightly improving. According to the FebWatch of CME (Chicago Mercantile Exchange), the probability of a 25-basis point interest rate hike in July has increased to 93%, with almost no suspense, while the timing of the first-rate cut may be delayed.
The impact of the off-season on domestic copper consumption is increasingly evident. Even for copper tubes with relatively stable downstream demand, the overall capacity utilization rate decreased by 1.86 percentage points week on week to 60.16% last week. The capacity utilization rate of other refined copper semis has also decreased by various degrees.
China's refined copper social inventory continued to accumulate to 119,500 tonnes this week, fulfilling expectations for imported copper customs clearance and reflecting a contraction in downstream demand. The end of intensive maintenance of smelters will also increase supply.
Based on the current macroeconomic situation and policy orientation, it is expected that the domestic economic stimulus policies will continue to be enhanced in the second half of 2023. Copper, as an important infrastructure and industrial raw material, will get stronger support in demand.
Against the backdrop of loose supply in the short term, continuous tightening monetary policy, and upcoming overseas stagflation, it is expected that copper prices will struggle to rise above Yuan 70,000/tonne. However, due to the resilient Chinese economy, the downward space for copper prices will also be limited.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com
